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The next challenge for social landlords

Neil Lawlor, Partner, discusses the rise of leaseholds, and the implications it can have on Housing Associations.

Leasehold is on the rise, but it can be a double-edged sword for housing associations.

Although the tenure goes hand in hand with the development of shared-ownership schemes and new flats, concerns are growing around the management of leasehold properties. Skilled managing agents and management companies are perfect partners for housing associations but there is a worrying number, which simply aren’t doing their jobs properly.

There could be many reasons for this, but a big part of the problem is that some agents and management companies don’t have the right resources or infrastructure to manage growing leasehold portfolios. That increases the risk of certain services not being delivered to the required standard or in some cases, not at all.

Unhappy leaseholders tend to challenge their social landlord if the services they are paying for aren’t up to scratch even though this is often the agent’s or management company’s responsibility. And it’s the people on the ground who usually bear the brunt of the complaints, including housing officers.

A further concern is that some agents and management companies are failing to engage and communicate with housing associations regarding potential disputes with leaseholders. This leaves many social landlords feeling like they’re at a dead end, unable to act while their own leaseholders continue to complain and challenge them.

A lack of accountability can also lead to properties not being maintained properly, which risks asset values depreciating or further costs to remedy the failures at a later date.

Overcoming these hurdles can be challenging but there are steps housing associations can take to manage managing agents more effectively and resolve potential disputes.

The first step is to establish what structure is in place as a number of different arrangements may exist across a portfolio. Some properties may be run by a management company or managing agent while others may be managed by a Resident Management Company which is party to a lease.

Understanding this structure is crucial to establish who should be approached if there is an issue with the management of a property. If a property is managed by a Residents Management Company or Right to Manage Company, there are provisions in ‘Company Law’ which could be used to a housing association’s advantage.

For example, it may be possible to exercise voting rights as a member of the company to make sure management functions are carried out correctly by the Residents Management Company. If an issue escalates, or the agent does not provide a satisfactory response to concerns raised, a structured approach must be taken.

Timescales should be set providing deadlines for responses to queries, including an explanation of the consequences of failing to meet those timescales. A paper trail of all steps taken, and any attempt at communication, is also vital as can be used as evidence if the matter goes to court or a tribunal at a later stage.

If properly resourced, managing agents and management companies can provide an invaluable service but those who fail to make the grade are adding to a growing list of challenges for housing associations.

Acting early and in a structured way can help to resolve potential issues and if the desired response does not materialise, don’t give up as there are always options which can help to agree a solution that suits all parties.

Devonshires Solicitors LLP

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In commemoration of the Equal Pay Act’s 50th anniversary, @acasorguk has published updated guidance on equal pay. In our new article, we provide an overview of the updated guidance for employers. https://www.devonshires.com/publications/d-brief-employment-pensions-blog-updated-guidelines-from-acas-on-equal-pay/

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